Not In The Cards

Half way through the fiscal year, state budget still isn't finished

By Lowman S. Henry
Who would have thought that half-way through the state's fiscal year the budget would still not be a completed document?

Our "full time" Pennsylvania General Assembly took a big chunk of the last three months of the year off, presumably to rest after the epic 101-day budget stalemate. True to form, one of the highest paid legislatures in the nation departed the capitol on Christmas break leaving a major component of the 2009-2010 budget still unresolved.

To end the budget deadlock of last summer and fall the governor and the legislature resorted to sleight of hand and included in the revenue projections $200 million from a source that did not - and to this day does not - exist. That would be fees and tax revenue from table games at the casinos which now dot the landscape of Penn's Woods.

The theory was that soon after passage of the budget the General Assembly would pass legislation legalizing table gaming and the commonwealth would rake in a windfall of $200 million in licensing fees. To keep things temporarily balanced, the legislature held off on approving funding for state-related universities, leaving them in a state of continued uncertainty.

That might have worked if the legislature had stayed in town to finish the job. But it didn't. Legislative leaders immediately closed up shop and headed home on a six week vacation that extended into mid-November. After putting in nominal effort prior to Thanksgiving, the "full time" legislature again adjourned to eat turkey and hunt deer. The $200 million revenue hole persisted, and students continued to wait for their funding.

With turkey in their bellies and venison in their freezers lawmakers returned to session. The state House finally did pass a bill legalizing table gaming, and so did the Senate. One small snag though: the bills were not the same. All of this was just too much for House Speaker Keith McCall and Senate President Pro Tempore Joe Scarnati, who decided it was time to take a break to celebrate the holidays (Christmas having been banned from the public square).

And so here we are, six months - half way - into the fiscal year and still $200 million short of the funds needed to balance the state budget.
That, however, is only part of the problem. Setting aside the revenue component of legalizing table gaming, the casino industry in Pennsylvania has been beset by a multitude of problems including but not limited to corruption, financial malpractice, and the failure to even get a casino up and running in Philadelphia.

The initial law legalizing slots casinos was one of those typically Pennsylvania pieces of legislation that was passed under pressure from leadership and without the inclusion of needed safeguards. Worse, promised property tax relief fell woefully short of expectations as lawmakers siphoned off tax revenue generated by the casinos for pet projects.

The current effort to expand gambling to include table gaming is shaping up as a rerun. Neither version of the expansion bill addressed the many serious deficiencies of the initial law. If gambling is to be expanded, it only makes sense to remedy the problems that have become evident over the past few years. In particular, there must be more oversight by law enforcement agencies over the activities of the casinos and their operators.

Keeping in mind revenue from the legalization of table gaming is supposed to plug a budget hole, media reports indicate lawmakers are now trying to stick their pet projects into the legislation. This means massive new government spending for projects that didn't have enough support to get into the state budget. Thus a new pot of WAM - Walking Around Money - will have been created with the ultimate impact being to fund projects that further legislators' re-election chances rather than address the state's revenue shortfall.

This is the Pennsylvania legislature at its worst. State employees have been laid off, a school for veterans' children has been closed, libraries and museums are cutting hours; but lawmakers are still grabbing fistfuls of our tax dollars to achieve the most important goal of all - re-election. It is important to understand that not all legislators are acting in this manner. But all too many are, and they apparently are the ones in control of the process.

The bottom line: Pennsylvania still does not have a completed state budget. State employees had their Christmas, er, holidays, ruined by Governor Ed Rendell threatening to lay-off 1,000 of them if the legislature doesn't deal with the budget shortfall by early January.

They better hurry up and get busy; after all, the Groundhog Day break is just around the corner.


(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is lhenry@lincolninstitute.org.)